How “Short Account History” Affects Your FICO Score

How “Short Account History” Affects Your FICO Score article image.

When you view your FICO® Score from Experian, you may see "short account history" listed as a factor that's hurting your score. Here's what that means, and what you can (and cannot) do to improve it.

About Risk Factors

"Short account history" is one of more than 100 possible risk factors that might be included with your FICO® Score to help explain what's impacting your credit score.

When you check your free FICO® Score 8 through Experian, you'll see a list of both positive and negative factors. Your Score Profile may list up to four top factors that are helping your score and up to four top factors that are hurting your credit score.

How Short Account History Affects Your FICO® Score

If "short account history" is a top factor influencing your FICO® Score, it will appear in the list of items hurting your score. That risk factor means the length of your credit history—one of the five major factors influencing your FICO® Scores—is holding your score back.

The FICO® Score uses the length of your credit history, which FICO sometimes calls "age of accounts," as a measure of your experience as a credit user. Credit scoring models reflect the historical trend that borrowers with more experience managing credit accounts tend to be more reliable about repaying debts than those with limited credit histories. Therefore, a longer credit history tends to bring higher credit scores, and seeing the "short account history" risk factor indicates your limited credit experience is potentially hurting your scores.

The good news is that the length of your credit history is responsible for only about 15% of your FICO® Score. If it's the most significant negative influence on your score, then there's relatively little wrong with your credit report. You'd potentially be in far worse shape if you had major issues with your payment history, which is responsible for about 35% of your FICO® Score, or with the amounts you owe on your accounts, which makes up about 30% of your score.

The not-so-good news is that there's not much you can do to improve the length of your credit history beyond being patient. If you bide your time while avoiding credit missteps, the length of your credit history will eventually become an asset and start to influence your credit scores for the better.

You obviously can't simply fast-forward time to lengthen your credit history, but there are some steps you can take to bring some improvement to that credit score factor:

  • Become an authorized user. Consider asking someone you know to become an authorized user on one of their longstanding credit card accounts. As long as the card issuer reports authorized users' credit information to the national credit bureaus (Experian, TransUnion and Equifax), you'll benefit from the primary cardholder's credit history length.
  • Think twice about closing your existing credit card accounts. Closing an account has no immediate impact on the length of your credit history because closed accounts stay on your credit report for up to 10 years. By the time the account is removed from your credit and no longer has any effect on your scores, you'll have another decade of credit history under your belt. Of course, losing your oldest account could still have some adverse impact on your length of credit history. More important is the effect closing an account can have on your credit utilization, since you'll immediately lose the account's credit limit. Closing a credit card could cause your utilization ratio to spike if you're carrying balances on your remaining accounts.
  • Avoid opening new accounts. The average age of your accounts is also a score factor. Having older accounts on your credit report brings up the average age of your accounts, and new accounts bring them down. If you're focusing on improving the length of your credit history, opening new accounts can work against you. One exception, however, is if you have very few accounts in your credit history. Opening new accounts is a good way to improve your credit if you have what's considered a "thin" credit file.

Length of Credit History Calculations

The specific algorithms used to calculate your FICO® Score are trade secrets, but FICO has disclosed that they use three pieces of information available in your credit report to determine the length of your credit history:

  • The age of your oldest account: This is the number of months since the opening date of the oldest loan or credit card account that appears on your credit report. It doesn't matter if the account is open or closed.
  • The age of your youngest account: As you'd probably guess, this is the number of months since you opened your newest loan or credit card account.
  • The average age of accounts: This is calculated by determining the number of months since each of the accounts on your credit report was opened, adding them all up, and then dividing by the number of accounts you have.

The larger any of these amounts are, the more they will tend to drive up your credit score.

The Bottom Line

If a short account history is negatively influencing your FICO® Score, the main reason for it is that you haven't been using credit for very long. The best way to address that is to keep using credit, and using it wisely, so that eventually your FICO® Score will reflect your growing experience with prudent debt management.

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